Calculate potential risk and potential profit



I would like to calculate the potential risk and potential profit of a trade and thereby the portfolio and display them as statistics in my web application. I believe this would be useful for the traders to evaluate the risk regularly and take appropriate action such as hedging, if needed.

Thought Max risk and max profit may not be of much use as they would be the entire investment and infinite in most unhedged stock transactions. I need help in calculating the potential risk and potential profit of the trade with a certain probability.

Appreciate if some could share the formula. Please let me know if you need any other details.

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